Penny Wong Says "Agree with Me"

The tendency among Australian government ministers to rewrite the history of reform politics could eventually haunt our economic performance.

Finance Minister Penny Wong was the opening speaker at a recent conference in Sydney hosted by the Economist magazine.

The Economist had brought together speakers to discuss international economic conditions, innovation in financial markets and investment opportunities in the Asian region.

Background to the discussion was the likelihood of a tough macroeconomic environment. While there was general agreement that Australia was better placed than most countries because of its proximity to China, the Economist staff writers had been generally sceptical about whether Australia could take advantage of its positioning.

They implicitly challenged Wong to lay out how the government could maintain the reform momentum which had helped the Australian economy beat the global credit crisis and which had characterised much of the Hawke, Keating and Howard years.

Wong began in what is now, disappointingly, the model for Australian ministers: she attacked the policies of the Opposition. It is more than passing strange that when given a platform from which to espouse their views, the strongest argument Ministers can muster is that they are not Tony Abbott.

It is hard to believe that barely a few months ago they had considered him the weak link in the Liberal line-up and unelectable.

After venting her spleen on Abbott and the Opposition, Wong said she wanted to talk about the politics of reform observing that elsewhere in the world debate was becoming more acrimonious and reform hard to initiate over the protests of those adversely affected.

In describing the difficulties confronting the government, she was effectively saying that it would be so much easier if everyone agreed with it and let it get on with the job as it could have done in years gone by.

There is probably some truth in the idea that technology has changed the way the media reports on politicians and that they are being seduced into a form of permanent electioneering.

But Wong and her ministerial colleagues are putting far too much emphasis on how relatively easy it had been for earlier governments to initiate policy change. The idea that tariff reform, wage fixation and exchange rate liberalisation were widely welcomed and the beneficiary of a bipartisan consensus is simply untrue.

In the 1970s, tariff policy was being widely debated after the Whitlam government had unilaterally cut tariffs by 25%. Workers took to the streets and there were open disagreements within the government. Still fighting against Whitlam in the 1977 election, the newly appointed Treasurer, John Howard, promised workers in marginal electorates suffering from tariff cuts that they would receive the protection they needed. This was code for a return to a higher tariff regime.

While in subsequent years, John Howard became more closely identified with market liberalisation policies, he started out as an overt protectionist. There was no bipartisanship.

Labour market reform was similarly, if not more, acrimonious. From the debates between Senator Ivor Greenwood and the abrasive head of the ACTU and future Prime Minister to the insertion of Senator Jim McClelland and Laurie Brereton as industrial relations ministers in the Hawke and Keating governments and, subsequently, the campaign to bring down the Howard government over its Work Choices policies, industrial relations was never easy. In 1996, workers smashed through the front doors of Parliament House.

While the GST is an accepted part of daily life today, Paul Keating lost the battle for what had been referred to as Option C at the Hawke tax summit after a strenuous campaign of opposition against his original GST proposal. John Hewson suffered a worse fate. References on the floor of the parliament to Hewson being a carcass swinging in the wind hardly qualified as bipartisan banter.

Policy reform in Australia has always been a struggle. There is little history of it being easier than it is today. However, it has always been driven by strong or determined personalities who staked their political fortunes on the changes they were trying to make.

It would be easier if everyone simply agreed. Pretending or even honestly believing there was a time when this happened is a danger for the country. The dynamism of the economy depends on a culture of change. If politicians are going to go weak at the knees in the face of criticism, mistakenly believing they are getting a raw deal, history also says that the economic outcomes are going to suffer.

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